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Orange County Rises From Ashes
Disney sparks up boom

By N. T. Amur
From Hotel & Motel Management magazine

Anaheim in 2002It now seems only distant history when California's economy took a nose-dive in the early 90's. The downtown came with such a tsunamic force it left behind a legacy of a broken lodging industry. Nearly all hotel and motel construction came to a screeching halt. Properties with less staying power disappeared altogether.

This was then. Things are different now. The hotel business is literally bursting at the seams here. The Walt Disney Company's announcement of Grand Californian, a new 750-room a five-star theme resort hotel in Anaheim, Calif. seems to have jump-started interest in Southern California in general, and Orange County in particular. Accordingly, the occupancies are up; so are the average daily rates.

"The daily rate in Orange County is $86.50 at a 76 percent occupancy," said Bruce Baltin with PKF Consulting in Los Angeles. "This is very good," he said, "It's also a substantial improvement over the past years." Many hotel operators would agree. Also, anecdotal reports indicate hotels are having a difficult time accommodating requests from meeting planners and reserving rooms for even moderate-sized groups.

"There is a strong demand for many more rooms, and the demand will continue to grow for the foreseeable future," Baltin said. "Southern California is just beginning to catch up with the rest of the nation in constructing new properties," he noted.

Donna Bartholomew, Sales and Marketing Director for Embassy Suits, agrees. "There just aren't enough rooms near the Anaheim Convention Center," she said. "With the new Center expansion we'll need even more guest rooms. With new hotel development in the area we can handle city-wide conventions."

What makes Orange County, especially the areas near Disneyland, a hotbed for hotel development is Disney's own ambitious plans to build California Adventure, a new theme park and resort. The new Disney park is expected to result in 20 million total visits (turnstile clicks) Compare this to little less than 14 million now.

To accommodate the new visitors Disney is consolidating its properties into a new resort. With the new Grand Californian added to its resort portfolio of Disneyland Hotel (1,136 rooms) and the adjacent Disneyland Pacific Hotel (502 rooms), the new Disney Resort will offer nearly 2,400 guest rooms, making it the largest hotel property in California.

Even with the new Disney Grand Californian and the existing 12,000 rooms near Disneyland and the Anaheim Convention Center the room inventory does not even come close covering the room deficit. New additional hotels will have to be developed to handle the projected tide of new visitors.

The City of Anaheim has been midwifing the development process with its own ambitious Anaheim Resort Area project. The development, a mammoth $5 billion, 1,100 acre public-private undertaking, will eventually integrate the City's primary visitor venues into a seamless entertainment and meeting destination.

"Anaheim Resort Area represents an excellent opportunity for public-private investment," said Bret Colson, Public Information Manager for Anaheim. "However, the window of opportunity is now. By the time the project is completed, much of the prime property will be gone. We're getting inquiries from throughout the world."

By putting its early dollars into Harbor Boulevard reconstruction the City has effectively nudged new development along this strategic thoroughfare. As the investment in the area intensifies, hotel development will move south on Harbor Boulevard, creating a 2-mile entertainment and lodging corridor.

Already, a 200-room Holiday Inn is in the works. The owner, Convention Center Inn, is also planning to reflag its existing property under the Holiday Inn brand. Another 400-room hotel may replace an existing smaller property on an adjacent parcel.

Much of the land available immediately, five parcels, lies along the Anaheim section of the Harbor Corridor which also extends through the City of Garden Grove. However, as the demand for available land heats up, the development along the Harbor Corridor will spill over into neighboring Garden Grove (pop. 150,000.)

Once a sleepy bedroom community, Garden Grove has taken a take-no-prisoner approach to development. The City has been quietly buying up property several blocks deep along Harbor to clear the land for development along its portion of the Corridor and cut a direct path to the Anaheim Convention Center directly one mile to the north.

"We're in the midst of a $54 million redevelopment effort that'll help create a giant contiguous meeting, entertainment, and lodging complex along the Harbor Corridor," said David Belmer, Project Manager.

The Harbor Corridor Entertainment District, as Garden Grove calls its development, has already attracted investment from several hotel developers. The City has recently signed development and disposition agreements (DDA) with three hotel developers. These agreements call for a seven-story, 165-room Hampton Inn & Suites, and a six-story, 162-room Hilton Garden Inn at an estimated cost of $25 million. The City is negotiating for a third 350-room, 12-story hotel on the same 10-acre parcel, adjacent to the 400-room Hyatt Regency Alicante.

"We expect a surge in demand for price sensitive business and tourist class hotels," said Gary Rohr, Principal of Stonebridge Companies of Denver. "The specific location and brands we are developing will give us a competitive advantage over other hotels in the marketplace," he commented.

The big Kahuna of the hotel development in Garden Grove may soon become a reality. OHI, Ltd., a London based developer, has obtained a 90-day agreement from the City to explore putting a 1,500-room resort in the Harbor Corridor Entertainment District. The period ends November 24.

When completed Anaheim and Garden Grove projects will create a meeting planner's paradise along the Harbor Corridor and the surrounding areas. It will offer an attractive destination with an unprecedented selection of meeting and entertainment venues ranging from professional sports to old-fashioned family fun.

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